At the beginning of the COVID-19 pandemic, many organisations were forced to adjust quickly by minimising hours, implementing salary cuts, and – of course – layoffs. Redundancy became a reason for an employee to be let go and this continues today.
However, mindfully managing redundancies minimises the impact on your business and the employees you are letting go of.
Are you looking for a fair redundancy process that keeps your business efficient? Keep reading to learn some top strategies.
What Is Redundancy?
According to Indeed, redundancy is a dismissal of employees that occurs when an employer needs to reduce the size of their workforce.
There are several reasons for redundancy depending on the situation, but the Australian Fair Work Act dictates two main circumstances for redundancy:
- When an employer no longer needs an employee’s job to be done by anyone
- If an employer becomes bankrupt or insolvent
The causes of when an employer no longer needs an employee’s job to be done are numerous, and the need for it can be sudden or gradual. Common causes include:
- The introduction of new technology for the job
- Slowdown of sales or revenue
- Economic recession
- Business closing down
- Relocation of specific jobs nationally or overseas
- Restriction of the business (merger or acquisition)
As an employer, it’s important not to put off managing your redundancies for too long. Let’s find out why.
Why Is Managing Redundancy Important?
Downsizing and issuing redundancies is hard for everyone involved. Suppose companies simply issue a redundancy and do not handle it with a level of sensitivity and compassion. In that case, several negative consequences may happen for both your business and your former employees, including:
- Depression or other mental health issues
- Declining reputation
Let’s take a closer look at these three consequences.
Negative Mental Health
How can a redundancy cause stress and pain if not handled sensitively?
There are several ways that the redundancy process can have an even more negative effect on your employees than it may already have. Some actions that can result in an even more negative impact include:
- Giving no explanation
- No face-to-face meetings
- Never following up
As a result, these actions negatively affect how these former employees think about your organisation and how they describe your organisation to others.
Every employee you let go will have something to say about your business. However, ensuring they are saying positive things about your business is in your best interest.
Spreading negative opinions can hurt your reputation by spreading to other potential future hires – or even your customers.
To have your employees continue to see your business in a positive light, manage redundancies in a respectful way with the employee.
Finally, if you don’t mindfully manage your redundancies, you may expose your business to the risk of litigation from your former employee, based on how they feel they’ve been treated.
Litigation for an unfair dismissal claim costs you even more time and money later on, so it’s best to be as respectful and supportive of your employee as possible during the process.
Suppose your HR policy includes ways to handle redundancies with sensitivity. In that case, you can ease the pain for the redundant employee, alleviate the stress on your human resources team, and avoid any long-term consequences that may put your business in a worse situation.
Let’s discuss the best ways to manage redundancies.
Top Six Ways to Manage Redundancies
There are several ways that you can manage redundancies with little effort or stress to both you and your employees.
HRonHand helps companies create HR policies and redundancy processes, including redundancy template letters, to help managers navigate this tricky area of HR.
To illustrate, here are our six tips to sensitively manage redundancies:
Prepare a Redundancy Document
A redundancy document ensures that you approach your redundancies in a structured way and keeps you focused on the objective.
This document should include your process for managing redundancies, such as which areas of your business need to be reduced. You should use it as a guide.
Notify All Staff in Advance of Redundancies
One of the worst ways to manage redundancies is by springing it on your employees without warning.
Before taking action, it’s best practice to give notice to your staff and all remaining employees of the situation and what they may expect. This way, your employees aren’t caught off guard and have ample time to prepare for whatever comes next.
Meet Face-to-Face with the Person
There’s nothing worse than finding out you’ve been let go through an email. To show your employee the utmost respect, meet with them face to face to share the news.
What’s more, meeting face to face is the best way to figure out what support this person may need.
Using this Redundancy Template Letter
When managing redundancies, it’s crucial to have everything in writing. To start, use this termination letter to advise of a redundancy.
This letter is for employers to use when going through a redundancy process to notify in writing any impacted employees. The letter includes the following information:
- The reason for redundancies
- The number of roles and/or positions to be made redundant
- Whether you will offer a voluntary redundancy process
Follow Up After the Redundancy
Your relationship with your employee doesn’t have to end immediately after their last day. You should continue checking in on them following the redundancy to ensure they’re doing well.
Follow up with the staff member after the redundancy to check their well-being, including their mental health and whether they have found another job. Don’t forget to continue to offer them the additional support they need.
Provide Resources to Help Them Move On
Being let go can have a severe negative impact on an employee, so offering as much support as possible is vital to help your former staff member cope.
To help your former staff member out, provide a resource or recruiter to help them find suitable alternative employment. Make sure that these outplacement services are relevant to your industry.
Wrap Up: Manage Redundancies Effectively to Maximise Your Potential
Managing redundancies isn’t an easy task. It may be one of the most challenging tasks that you have to do as an employer. However, if you stay mindful of your employee’s feelings throughout the process, the situation becomes more manageable, and you can potentially help your employee find other opportunities.
Visit HRonHand for more advice and free templates for how to mindfully manage redundancies in your workplace.